Of all the minerals mined from the Earth, none is more useful than gold. Its usefulness is derived from a diversity of special properties. Gold conducts electricity, does not tarnish, is very easy to work, can be drawn into wire, can be hammered into thin sheets, alloys with many other metals, can be melted and cast into highly detailed shapes, has a wonderful color and a brilliant luster. Gold is a memorable metal that occupies a special place in the human mind.
Historical uses of gold;
Throughout the history of our planet almost every established culture has used gold to symbolize power, beauty, purity and accomplishment. Today we continue to use gold for our most significant objects: wedding rings, Olympic medals, Oscars, Grammys, money, crucifixes and ecclesiastical art. No other substance of the same rarity holds a more visible and prominent place in our society.
Uses of gold in jewelry making:
The production of ornamental objects was probably the first use of gold over 6000 years ago. Gold is found in the pure state, is very easy to work and was probably the first metal used by humans. Today, most of the gold that is newly mined or recycled is used in the manufacture of jewelry. About 78% of the gold consumed each year is used in the manufacture of jewelry.
Measurement of purity in gold:Purity of
The properties of an attractive metal that is easily worked into beautiful objects. Another extremely important factor that demands the use of gold as a jewelry metal is tradition.
The alloys of gold have a lower value per unit of weight than pure gold. A standard of trade known as "karatage" was developed to designate the gold content of these alloys. Pure gold is known as 24 karat gold and is almost always marked with "24K". An alloy that is 50% gold by weight is known as 12 karat gold (12/24ths) and is marked with "12K". An alloy that contains 75% gold by weight is 18 karat (18/24 = 75%) and marked "18K". In general, high karat jewelry is softer and more resistant to tarnish while low karat jewelry is stronger and less resistant to tarnish - especially when in contact with perspiration.
Alloying of gold with other metals:
Alloying gold with other metals changes the color of the finished products.
An alloy of 75% gold, 16% silver and 9% copper yields yellow gold. White gold is an alloy of 75% gold, 4% silver, 4% copper and 17% palladium. Other alloys yield pink, green, peach and even black colored metals.
Gold and silver as medium of exchange:
Because gold is highly valued and in very limited supply it has long been used as a medium of exchange or money. The first known use of gold in transactions dates back about 6000 years. Early transactions were done using pieces of gold or pieces of silver. The rarity, usefulness and desirability of gold make it a substance of long term value. Gold works well for this purpose because it has a high value, is durable, portable and easily divisible.
Some early printings of paper money were backed by gold held in safe keeping for every unit of money that was placed in circulation. The United States once used a "gold standard" and maintained a stockpile of gold to back every dollar in circulation. Under this gold standard, any person could present paper currency to the government and demand in exchange an equal value of gold. The gold standard was once used by many nations but it eventually became too cumbersome and is no longer used by any nation.
The gold used as a financial backing for currency was most often held in the form of gold bars, also known as "gold bullion". The use of gold bars kept manufacturing costs to a minimum and allowed convenient handling and storage.
Gold bullion and coins:
Today many governments, individuals and institutions hold investments of gold in the convenient form of bullion. Today gold coins are no longer in wide use for financial transactions. However, gold coins issued in specific weights are popular ways for people to purchase and own small volumes of gold for investment. Gold coins are also issued as "commemorative" items. Many people enjoy these commemorative coins because they have both a collectable value and a precious metal value.
Uses of gold in electronics:
The most important industrial use of gold is in the manufacture of electronics. Solid state electronic devices use very low voltages and currents which are easily interrupted by corrosion or tarnish at the contact points. Gold is the highly efficient conductor that can carry these tiny currents and remain free of corrosion.Electronic components made with gold are highly reliable.Gold is used in connectors, switch and relay contacts, soldered joints, connecting wires and connection strips.
A small amount of gold is used in almost every sophisticated electronic device. This includes: cell phones, calculators, personal digital assistants, global positioning system units and other small electronic devices. Most large electronic appliances such as television sets also contain gold.
One challenge with the use of gold in very small quantities in very small devices is loss of the metal from society. Nearly one billion cell phones are produced each year and most of them contain about fifty cents worth of gold. Their average lifetime is under two years and very few are currently recycled. Although the amount of gold is small in each device, their enormous numbers translate into a lot of unrecycled gold.
Use of gold in computers:
Gold is used in many places in the standard desktop or laptop computer. The rapid and accurate transmission of digital information through the computer and from one component to another requires an efficient and reliable conductor. Gold meets these requirements better than any other metal. The importance of high quality and reliable performance justifies the high cost.
Edge connectors used to mount microprocessor and memory chips onto the motherboard and the plug-and-socket connectors used to attach cables all contain gold. The gold in these components is generally electroplated onto other metals and alloyed with small amounts of nickel or cobalt to increase durability.
In Dentistry:
Even at much higher expense, gold is used in dentistry because of its superior performance and aesthetic appeal. Gold alloys are used for fillings, crowns, bridges and orthodontic appliances. Gold is used in dentistry because it is chemically inert, non allergenic and easy for the dentist to work.
Gold was much more generously used in dentistry up until the late 1970's. The sharp run-up of gold prices at that time motivated the development of substitute materials. However, the amount of gold used in dentistry is starting to rise again. Some motivation for this comes from concerns that less inert metals might have an adverse effect on long-term health.
In medicines and surgical instruments:
Gold is used as a drug to treat a small number of medical conditions. Injections of weak solutions of sodium aurothiomalate or aurothioglucose are sometimes used to treat rheumatoid arthritis. Particles of a radioactive gold isotope are implanted in tissues to serve as a radiation source in the treatment of certain cancers.
Small amounts of gold are used to remedy a condition known as Lagophthalmos, which is an inability of a person to close their eyes completely. This condition is treated by implanting small amounts of gold in the upper eyelid. The implanted gold "weights" the eyelid and the force of gravity helps the eyelid close fully.
Radioactive gold is used in diagnosis. It is injected in a colloidal solution that can be tracked as a beta emitter as it passes through the body. Many surgical instruments, electronic equipment and life-support devices are made using small amounts of gold. Gold is nonreactive in the instruments and is highly reliable in the electronic equipment and life-support devices.
Gold in aero space;
Billions of dollars on a vehicle that when launched will travel on a voyage where the possibility of lubrication, maintenance and repair is absolutely zero, then building it with extremely dependable materials is essential. This is exactly why gold is used in hundreds of ways in every space vehicle that NASA launches.
Gold is used in circuitry because it is a dependable conductor and connector. In addition, many parts of every space vehicle are fitted with gold-coated polyester film. This film reflects infrared radiation and helps stabilize the temperature of the spacecraft. Without this coating, dark colored parts of the spacecraft would absorb significant amounts of heat.Gold is also used as a lubricant between mechanical parts.
In the vacuum of space, organic lubricants would volatilize and they would be broken down by the intense radiation beyond Earth's atmosphere. Gold has very low shear strength and thin films of gold between critical moving parts serves as a lubricant - the gold molecules slip past one another under the forces of friction and that provides a lubricant action.
Uses of Gold in Awards and Symbols of Status;
What metal is used to make the crown worn by a king? Gold! This metal is selected for use because gold it is THE metal of highest esteem. It would make no sense to make a king's crown out of steel - even though steel is the strongest metal. Gold is chosen for use in a king's crown because it is the metal associated with highest esteem and status.
Gold is associated with many positive qualities. Purity is another quality associated with gold. For this reason, gold is the metal of choice for religious objects. Crosses, communion ware and other religious symbols are almost always made with gold for this reason.
Gold is also used as the first place winner's medal or trophy in almost any type of contest. First place winners at the Olympic Games are given gold medals. The Academy Awards Oscars are gold awards. Music's Grammy Awards are made of gold. All of these important achievements are honored with awards made of gold.
Uses of Gold in Glassmaking;
Gold has many uses in the production of glass. The most basic use in glassmaking is that of a pigment. A small amount of gold suspended in the glass when it is annealed produces a rich ruby color.
Gold is also used when making specialty glass for climate controlled buildings and cases. A small amount of gold dispersed within the glass or coated onto the glass surface will reflect solar radiation outward, helping the buildings stay cool in the summer, and reflect internal heat inward, helping them stay warm in winter.
The visor on the helmet of an astronaut's space suit is coated with a very thin film of gold. This thin film reflects much of the very intense solar radiation of space, protecting the astronaut's eyes and skin.
Gold domes of temples and churches have become the order of the day.
Gold has the highest malleability of any metal. This enables gold to be beaten into sheets that are only a few millionths of an inch thick. These thin sheets, known as "gold leaf" can be applied over the irregular surfaces of picture frames, molding or furniture.
Gold leaf is also used on the external and internal surfaces of buildings. This provides a durable and corrosion-resistant covering. One of the most eye-catching uses of gold leaf is on the domes of religious buildings and other important structures. The cost of this "roofing material" is very high per square foot; however, the cost of the gold is only a few percent of the total project cost. Most of the cost goes to the labor of highly skilled artisans who apply the gold leaf.
Future Uses of Gold
Gold is too expensive to use by chance. Instead it is used deliberately and only when less expensive substitutes cannot be identified. As a result, once a use is found for gold it is rarely abandoned for another metal. This means that the number of uses for gold have been increasing over time. Most of the ways that gold is used today have been developed only during the last two or three decades. This trend will likely continue. As our society requires more sophisticated and reliable materials our uses for gold will increase. This combination of growing demand, few substitutes and limited supply will cause the value and importance of gold to increase steadily over time.It is truly a metal of the future.
Silver usage:
And much like gold, silver can be used as both an industrial commodity and as a monetary investment - though industrial uses are by far the main driver of the silver market.
The market functions based on basic supply and demand fundamentals. Supply largely comes from mine production, which accounted for approximately 70% of global supply in the past decade. Recycled silver scrap is the second largest source of silver, totaling about 20% of global supply. The remaining supply comes from producer hedging, government sales and implied net disinvestment.
New Sources of Demand:
Industrial applications are the main source of demand in the silver market. Silver is a good thermal and electrical conductor, making it useful in switches and fuses. It is also used in batteries, and its quality as a bactericide allows it to be used in water purification systems and a wide range of consumer products. The use of silver in wood preservatives was expected to be introduced this year, but licensing was delayed.
Wood preservatives are predicted to be a significant consumer of silver in the coming years. This application remains at the licensing stage and therefore it is not surprising that product developers are remaining tight-lipped about the developments and progress of this licensing. A new use of silver is growing in popularity.
The technology for radio frequency identification devices (RFID) has been around since the Second World War, but only in recent years has the updated technology grabbed the attention of commercial and military supply-chains for its use in inventory tracking.
Silver Outlook:
Despite the potential oversupply in 2008, many analysts are staying bullish on silver. As primarily a by-product of base metals mining, (silver) remains moderately price inelastic and it can expect rising mine production based upon increases in production of the host metals, primarily copper. Silver's price gains, however, can be attributed to solid demand-side investment, and that appetite looks set to continue in 2008 as the race between the old world and the emerging economies to corner the world's natural resources intensifies... be it a mine or simply physical metal. The fly in the ointment may be the slowing global economy and, more so than in gold, this could signal a more modest increase than in former years.
The fundamentals of the silver supply and demand dynamics are unlikely to have a major effect on driving the price. Many experts feel that Silver has the potential to break through $20 per 10 grams (Rs900) in near future.
Industrial Uses of Silver;This is involved in many industries like currency, decoration products, mirrors etc. Silver was used to manufacture money in its electrum mould from the period of around 700 BC. After that, silver was cleaned and used for producing coins. Several countries are using Silver as the fundamental form of monetary.
Sterling silver is used to manufacture many jewelries and silverware. The composition of sterling silver is 92.5% of silver with 7.5% of copper. Ornaments produced from sterling silvers were usually coated with a thin layer of .999 fine silver to provide a shiny appearance to the materials. This method is known as flashing. These ornaments can also be coated using goldor rhodium. Silversmiths operate along with other metals like steel, copper, gold and brass. They are used for producing silverware, armor, vases, ornaments and various other architectural products. Silver ornaments have attracted the attention of many fashion lovers and hence it is involved in several arts items.
With gold selling for around 50 times the price of silver, one may be perplexed to hear that silver is more valuable than gold. It seems like an obvious contradiction.
Silver has heavy demand by industry, while gold has limited demand, other than for jewelry. In terms of its necessity to a modern society, silver has the highest value and the greatest utility. An ounce of silver has more value to industries that must have it than does an ounce of gold.
For 60 years more silver has been consumed by industry than produced. That's the most bullish circumstance possible for a commodity. Silver is in much greater demand by industrial users worldwide than is gold. Yet gold sells for fifty times the price of silver.
One may be shocked to learn that there's more gold around than silver. About five times more gold is documented in above-ground supplies than silver. Furthermore, there are less years of silver production remaining underground to be mined than gold. These powerful facts are not currently reflected in the price. However, some day they will be.
That's why the opportunity for profit exists in silver like no other opportunity in history. Nothing in the world has the potential to multiply your net worth like silver.
IN DEMAND
Today, world silver inventories are at the lowest point in 200 years. All the known and recorded silver in commodity warehouses, and elsewhere, only comes to 250 million ounces, and most of that is tied up and unavailable. Industry requires over 900 million ounces each year. Mining and recycling fall short of providing the necessary silver.
Silver is the best conductor of electricity. Every computer, server, monitor, cell phone and switch must have silver. Lasers, satellites, high-tech weaponry and robotics, all require silver. Digital technology and telecommunications need silver. Around the house there's silver in every TV, washing machine, wall switch and refrigerator. Conductors, switches, contracts and fuses use silver because it does not corrode or cause overheating and fires. Silver is used heavily in photography and in prints. Meanwhile, new and exotic uses for silver are expanding.
A new double layer of silver on glass is sweeping the window market, as it reflects away almost 95% of the hot rays of the sun. A new electronic application for "smart tags" that are replacing bar codes could use significant quantities of silver.
Silver achieves the most brilliant polish of any metal and is the best reflector of light, allowing it to be used in mirrors and in coatings for glass, cellophane or metals. Chemical reactions can be significantly increased by adding silver. Approximately 700 tons of silver are in continuous use in the world's chemical industry for the production of plastics.
Batteries are now manufactured with silver alloys. Lead-free silver solder is used heavily for joining materials and producing leak-tight joints. Silver is also widely used in silk-screened circuit paths, membrane switches, electrically heated automobile windows, and adhesives. Silver has a variety of uses in pharmaceuticals. Silver sulfadiazine is the most powerful compound for burn treatment. Catheters impregnated with silver eliminate bacteria. Silver is increasingly being tapped for its bactericidal properties and water purification. In the face of all these industrial uses there is less silver available.
SILVER BUBBLE
At the epicenter of reasons for launching silver to the heavens is the coming end of artificially depressed silver prices. There is no legitimate free market explanation for such extremely depressed prices in the face of greater demand and depleted world inventories.
The fundamentals of silver are so bullish and so compelling INDUSTRIAL USER PANIC
The amount of silver used in each industrial application, while vital to the finished item, is a tiny percentage of the product's total cost. This means industrial users will not readily substitute other materials for silver in a price rise. If the price of silver jumps significantly, they will be more inclined to build inventories.
When the inevitable silver shortage hits, it will be only a matter of time before industrial users try to protect themselves from delays and price increases. They will attempt to build inventories of silver. You don't risk the shutdown of an assembly line for want of a single, low-cost component.
As industrial users try to immunize themselves from assembly line shutdowns, extraordinary demand will make the supply tighter.
ANOTHER BOMBSHELL;
There are many forms of paper silver where the real silver does not exist, including pool accounts, leveraged accounts and bank silver certificates.
These accounts offer cheaper commissions and storage fees (since there is no real silver backing). Estimations indicate that there is well over a billion ounces of silver held in this form, perhaps by Swiss banks alone.
The issuers have use of "free" money, which is highly profitable to them as long as silver doesn't move up in price. But when silver moves up decisively, the issuers are, in essence, holding a short position. This is just another one of the many unique reasons for a historical blow off in the price of silver. At some point, with a high enough price of silver, the issuers can panic and try to limit losses. The only way to limit their losses is to buy silver. The net effect of the cumulative short positions in silver amount to a hydrogen bomb, on top of an atomic bomb, on top of a neutron bomb.
Irrespective of the concerns over financial tightening, talks of a gold bubble and economical weakness, gold marked its tenth straight annual gain in 2010. Not only gold, other members of the precious metal group such as silver and platinum were also up last year. At this juncture, last year's bull run appears to be running out of steam. However, both technicals and fundamentals indicate improved investment options in precious metals, particularly this metal, if an investor has a long-term investment plan.
The role of market fundamentals in determining market direction is significant in all markets, and precious metals market is no exception. Since a strong relationship between economic indicators and precious metal market exists (evident from correlation analysis), positives in the economical aspects would definitely reflect in market moves. From a fundamental point of view, economic growth is expected to boost demand from end-user segments.
Let us have a look at physical demand for silver and its impacts on the market. Silver is mostly used as components in highly sophisticated areas of technology or jewelry. Reliability and performance are the primary reasons why precious metals are used in electronic devices. As the electronics sector has been inching towards increased sophistication in the past few years, silver demand has been on the rise. The growth of the electronics industry in the BRIC nations is also encouraging for silver demand. Big markets with relatively lower penetration levels (and hence potential growth areas), such as India and China, are certainly the talking point in most investment articles making a case for silver.
Electronics and Electricals; Plus Growing Demand from New Uses:
Global silver demand, buoyed by higher industrial applications and strong investor interest, has recovered well from the 2008-2009 levels. Electronics is still one of the largest components of silver demand, accounting for more than 60% of the total industrial demand. The stronghold demand source of silver has been doing well over the past few years. Prior to the recession, the global market for electronic products was growing at an healthy annual average of about 13%, from USD 1.4 trillion in 2004 to an estimated USD 2.5 trillion in 2009. With the electronics and electrical industry reverting to a state of normalcy now, the future appears bright and shining. By 2012, the market is expected to reach approximately USD 3.2 trilli on.
In addition to the growth in mature industrial bastions such as the electrical and electronic industry, silver demand has grown by leaps and bounds in new areas such as conductive silver inks and new applications in the field of nanotechnology. If silver demand was to be the only factor driving prices, one could close his eyes and simply go long silver for long term. Demand prospects are robust and incisive € few other commodities are finding new uses as much as silver has over the recent past.
Increasing quality concerns ensure high use of silver in even ordinary switches and circuit-breakers. On its attribute of being the best conducting metal, silver is used in most electrical appliances such as conductors, switches, contacts and fuses. Silver membrane switches are extensively used in computer keyboards and control panels of electr ical and electronic gadgets and appliances. Silver is everywhere in electronic appliances € enough to impart a considerable impetus to global consumption (which shows a steady rise despite the recession).
Alternative uses of silver:
Talking of alternative uses of silver, it is also employed in the production of chemicals for the USD 300 billion global plastics industry. Well over 700 MT (metric tons) of silver every year is required for the production of plastics. As a catalyst, silver is used in the production of ethylene oxide (required for the production of synthetic textiles). Silver demand in industrial applications is diverse and is set to improve with the influx of new technologies. The diversity of demand sources also make it shock-proof i.e. even if one leg of demand weakens the surge in others make up for the weakness.
Other lesser known applications of silver include batteries, catalysts, and brazing and soldering alloys. Emergence of structural changes in the technological front such as silver-zinc batteries, solar (photo voltaic) batteries, RFID smart tags and antibacterial applications could result in substantial consumption of the metal.
There are two major takeaways from the enumeration of silver's industrial demand sources. One € that it is diverse and one should be keeping an eye on a number of industries to comprehend the state of silver fundamentals. Two, unlike other precious metals, silver's dependence on the industry is significantly higher. Notably, during the past decade silver use in industrial applications has increased from 35% of the total silver supply to more than 50% € and it is growing. In other words, the influence that the general stock market has on the white metal is not going to go away in the foreseeable future.
China and India € Emerging Electronics and Electricals Markets;
Historically, the electronics industry has drawn its strength from the U.S. and Japan; however, in the past few years, other regions, especially China and India, have been rapidly expanding their electronics manufacturing and consumer bases. The phenomenal growth of the electronics industry in the BRIC nations reflects the potential for increasing demand for silver in the upcoming years.
The massive industrial demand from China was clearly evident during this New Year season also; many times during the period, silver traded at a high premium in China over international market prices. What makes the Oriental economies key players in the silver market is not only an expanding electronics market but also a burgeoning jewelry demand. India and China, typically during the Diwali festival and the Chinese New Year respectively, present a massive demand for the white metal. Rapidly growing gold prices has made silver a replacement for gold in jewelry- that has attracted a significant proportion of the €middle class' population into the silver market in these regions.
China's silver market has emerged as a key determinant of international prices because of its significant influence on production and consumption. Since 2000, the Chinese silver industry has been growing both in terms of production and consumption, rewriting records every year. With massive investments in the heavy industry, Chinese consumption of silver alloy, soldering and silver paste has soared in the recent years.
India too is a key participant in the global silver market now. India is the largest importer of silver in the world with a consumption of nearly 4000 tons of silver annually, of which more than 60% is used as jewellery. In terms of industrial use, India ranks third, following the US and Japan. In India, silver fabrication in industrial applications such as ele ctronics and metallurgy accounts for a meagre 15% only. That speaks volumes for the scope of expansion for silver demand from industry.
Summing up, silver, which derives its demand from both industrial and investment use, opens up various investment options at this juncture. With strong fundamentals for the medium- to long-term, silver is expected to perform strongly in the next few years.
